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Crypto News: Bitso Helps Turn Dollars Into Pesos With Bitcoin – Bloomberg

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Bitso says it’s helping money transfer services cut the cost of exchanging dollars for pesos
Illustration: Woshibai for Bloomberg Businessweek
Even as cryptocurrencies have skyrocketed in price, there’s always been the question of what they can really be used for. One of the stronger use cases is remittances—the cross-border cash transfers that have long been dominated by the likes of Western Union Co. and MoneyGram International Inc. Intuitively, a technology that allows one person to send money to another without an intermediary could make remittances quicker and cheaper.
There are still huge barriers, from the wild volatility of many cryptocurrencies to the complexities of buying them in one country and then converting them back to traditional cash in another. Bitso, a Mexico City-based crypto trading platform, says it’s making a dent. It estimates it’s helping money transmitters move around 2.5% of the more than $40 billion in remittances flowing across the border from the U.S. to Mexico annually.
Bitso doesn’t offer remittances directly on its crypto trading app, which has more than 2 million users in Latin America. Instead, it’s so far been doing work behind the scenes for money transfer services, which can use Bitso’s API, a technology that shares data among apps or services. One such company is Bridge21, a U.S. service that says it’s been using crypto for Mexico-bound remittances since 2016. “Depending on the cryptocurrency you use it can take minutes or even seconds to move the money as opposed to days,” says Will Madden, Bridge21’s chief executive officer.
These businesses can collect dollars in the U.S. and then convert it to crypto, which can then be exchanged for pesos to be paid out in Mexico. Bitso’s customers in remittances can use different tokens, but one option is to swap their currencies for the USDC stablecoin, a crypto currency that’s pegged to the U.S. dollar, which means its price is supposed to remain $1 at all times. In a big chunk of these transactions, users don’t even know their money is being turned into crypto along the way, says Bitso co-founder and CEO Daniel Vogel.
In other words, Bitso hasn’t yet eliminated all the layers of middlemen, though it says it can make things more efficient. “Seventy percent of all remittance flows are cash to cash,” says Santiago Alvarado, Bitso’s head of product for business. “Unless the first mile and last mile start with a digital wallet or digital bank account, you still have to have that partner that can collect cash and allows for cash pick-up on the other end. Everything else can be done within Bitso.”
Remittances remain a gigantic source of income for the Mexican economy as whole, representing almost 4% of the country’s gross domestic product. An estimated 95% comes from emigrants in the U.S., who have long relied on relatively expensive remittance services that may operate out of storefronts or desks inside convenience stores. According to data from the World Bank, the average cost of sending $200 from the U.S. to Mexico in the first quarter of 2021 was $7.29, or 3.65%.
Douglas King, a payments risk expert with the Federal Reserve Bank of Atlanta, says crypto can bring much-needed competition to the industry. “There is potential for continued pressure to bring the cost down,” he says. The transfer business is expensive because it involves having agents on both sides of the border, as well the costs of foreign exchange, banking relationships, and ensuring ready access to cash in multiple currencies and countries. Commissions can pile up throughout the transaction. Bitso says it can cut one of the biggest costs—foreign exchange—down to a few tenths of a percentage point, compared with about 2% at some providers.
Bitso is hardly the first company to try to do remittances via crypto—one incumbent has already taken a shot. MoneyGram, one of the largest money-transfer services in the U.S., worked with Ripple Labs Inc. in 2019 to try out a similar approach. It sent some foreign-exchange transactions over Ripple’s network, using a crypto token called XRP as the bridge between traditional currencies. “The technology works,” says MoneyGram CEO Alex Holmes. “But it was an early product and had a long way to go.” And then Ripple ran into a regulatory snag that Holmes says forced MoneyGram to stop using it. The U.S. Securities and Exchange Commission alleged that the XRP token was essentially an unregistered security that Ripple sold to raise money for the company. Ripple has disputed that XRP is a security and is fighting the SEC’s lawsuit.
MoneyGram has launched a different crypto partnership, this time with the Stellar Development Foundation, which is intended to allow its consumers to use local currencies to buy USDC stablecoins, or to exchange those tokens for cash. The foundation, which maintains an open-source payments network called Stellar, also worked with Bitso to integrate USDC into its platform.
But MoneyGram’s experience with Ripple points to a challenge for crypto remittances: The regulations around crypto are essentially still being written. On Nov. 1, a group of federal regulators in the U.S., including the Treasury Department and the Federal Reserve, issued a report calling for stricter rules for stablecoins, which are now valued at around $130 billion. Because such coins are typically designed to be backed by traditional currencies and assets held in reserve, the regulators urged Congress to pass laws to regulate them like banks so as to lessen the risks of panics akin to bank runs. “The regulations have not caught up, and it’s a total blind spot,” says John Court, who heads regulatory affairs at the Bank Policy Institute, a trade association. He says companies using crypto in remittances should “absolutely be worried” about policymakers looking over their shoulders.
In Mexico, too, crypto has been viewed with skepticism by policymakers. The nation’s central bank has repeatedly said cryptocurrencies aren’t legal tender and that financial institutions can’t allow consumers to buy and sell goods using crypto, though companies are able to use the technology internally. The Comisión Nacional Bancaria y de Valores, a financial regulator, says in a statement that money transmitters including MoneyGram can’t offer to turn cash into tokens as the company plans to with Stellar. “We are aware of Mexico's position and if/when we do expand into the Mexican market, we will do so only after securing required licensure and ensuring the structure is compliant with Mexican law,” a spokesperson for MoneyGram says in a statement.
The CNBV also says that business models being developed though crypto trading platforms aren’t regulated by any financial authority in the country. (Bitso says its crypto business is regulated in Gibraltar, where it has a license.) “Mexico still doesn’t have strong regulation in terms of cryptocurrencies, there’s still a legal void,” says Mario Di Costanzo, the former head of Condusef, Mexico’s consumer protection agency for financial services. “We also can’t rule out serious problems with money laundering and frauds. Consumers are vulnerable because if there’s ever a problem with a transaction, it’s not entirely clear who would be able to help them, and I don’t see the regulation changing in the short term.”
The fact the remittances cross international borders means that a broad swathe of agencies could enter the fray. “There will be huge push back from regulators on the use of cryptocurrencies” for regular remittances, says Ahmed Ismail, co-founder at Havyn Global, an online platform for digital currencies based in Dubai. He says there will always be compliance issues, particularly in countries seen as higher risk for money laundering. “But I do see a shift in many businesses in that they want to learn more about cryptocurrencies and naturally we’ll see more crypto-based solutions.” —With Justin Villamil and Michael O'Boyle
 
Read next: Shiba Inu Coin Craze Is Driving Demand for—What Else?—Shiba Inu Puppies

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Crypto Airdrop: What's an Airdrop and Why Crypto Airdrops Are Issued – Coindesk

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Crypto Airdrop: What’s an Airdrop and Why Crypto Airdrops Are Issued  Coindesk
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Foundry launches a BTC mining rig marketplace with over 40k units – Techstory

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The Bitcoin mining industry is booming as the overall network hashrate continues to increase. This has been used as a good opportunity by Foundry to launch a BTC mining rig marketplace. The mining rig marketplace is called the Foundryx and has over 40,000 mining units for resale. They also have their own mining setups, which contribute 16.8% to the total BTC hash rate. This also makes them the largest miner as per hash rate, followed closely by AntPool.
The company has been making money by employing the mining rigs themselves and selling them as well. This makes it really profitable for them. In August 2020, the digital currency group invested $100 million in the company. Foundry was just a year old when this investment was made, and they have been working in the BTC mining industry ever since. Their new marketplace is also a step in the right direction as it offers much-needed rigs in the market,
Foundry USA launches BTC mining rig marketplace
The company is already the largest individual contributor of the BTC hash rate with 29.83 EH/s. And now, they are planning to use the company’s robust shipping and logistic units to reach customers who purchase from their new mining unit marketplace. I think their profits are going off the charts with this new business idea.
One very important thing to note here is that the BTC mining rig marketplace has units for resale. This means it doesn’t sell new devices. The mining rigs have been used before and hence will be available for cheaper rates. Additionally, the current supply chain issues and chip shortages have increased the demand for used rigs. Currently, there aren’t many used rigs resellers in the market that can be trusted properly, but with Foundryx, the trust factor is there. This is why they are planning to become a properly trusted secondary marketplace of BTC mining rigs. It is also important to note that Foundry has also been launching staking services on 20 different networks, which will be yet another important business for them.
What are your thoughts on Foundry USA launching a used BTC mining rig marketplace? And do you think it will take off due to the current shortage of chips and rigs supply? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Metaverse will be a multitrillion dollar market, says Cathie Wood.
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I am a geek trying to make an audience for his awesome content. With laser eyes, I believe that Bitcoin is going to $100k very soon. HODL! Follow me on Twitter for more updates.

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Crypto Markets Rebound $130B: Bitcoin Recovers 5%, Shiba Inu Up 37% Since Yesterday’s Low – CryptoPotato

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The crypto market has recovered more than $100 billion in a day with BTC standing at $36,000 and the alts with more impressive gains.
After the two consecutive days of price slides, bitcoin has reclaimed some ground and stands around $36,000. The altcoins have reacted even better with notable double-digit price gains from Terra, Avalanche, Shiba Inu, and many others.
The past few days didn’t go all that well for the primary cryptocurrency. It was just on Thursday when a sudden price pump drove the asset to a multi-day high at $43,500.
However, this is where it all went south. Bitcoin started to dump in value rapidly and slumped to $38,000 a day later. This became the lowest price point since early August.
While this was a steep correction of its own, the bears only tightened their grip on the market. As a result, BTC dropped by another $4,000 and dipped to around $34,000. This, on the other hand, became the lowest price point since late July.
Since then, though, BTC added around $2,000 and now stands at $36,000. Nevertheless, its market capitalization is still well below $700 billion.
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The altcoins suffered even more than BTC in the past few days with massive price drops. Now, though, most are well in the green on a daily scale.
Ethereum went down by roughly $1,000 in two days, bottoming at $2,300. Now, though, ETH has added more than $200 of value and sits above $2,500. More similar gains come from Ripple and Solana.
On the other hand, Binance Coin, Cardano, Polkadot, Dogecoin, and MATIC have recovered around 10% each. More gains come from Terra (20%), Avalanche (13%), and Shiba Inu (21%) on a daily scale. SHIB is up by approximately 40% since yesterday’s low, though.
Ultimately, the cryptocurrency market capitalization is up by $130 billion since yesterday’s low and is now at nearly $1.7 trillion.
Jordan got into crypto in 2016 by trading and investing. He began writing about blockchain technology in 2017. He has managed numerous crypto-related projects and is passionate about all things blockchain. Contact Jordan: LinkedIn

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